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Wow! After years of battling over what constitutes “disparate impact”, a United States District Court vacated HUD’s rule under the Fair Lending Act (Court Vacates Rule). This is a huge victory for lenders and the MBA, who have fought long and hard against this rule.

HUD’s disparate impact rule opened the door for claims of lending discrimination based on only the effects and not the intent of certain lending activity. The court ruled that the law prohibits only “intentional” behavior and does not address effects based solely on actions. The court said that HUD exceeded its authority in promulgating the disparate impact rule. Lenders and the MBA had contended all along. The case will now go for review before the Supreme Court.

The MBA will continue to take active legal actions until this matter is finally resolved. Their efforts are to have the Supreme Court issue the same ruling as the District Court and to strike down the disparate impact rule because it disparately impacts lenders.

Finally, a win for the lending community, and for those lenders who do business the right way with all good intentions of assisting qualified consumers in realizing their dream of homeownership. Thanks MBA and all those who worked for this hard fought victory. Let’s keep up the good fight.

About the Author

Mike Vitali presently serves as the Senior Vice President and Chief Compliance Officer of LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties include the research, interpretation and analyzing of existing and proposed legislation related to the industry to recommend policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman’s Award from the MBA of PA,